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What is the CPI, and what does it mean to me as an investor?

The Consumer Price Index, or CPI, is a measure of the changes in retail prices of a “basket” of about 600 goods and services over a set period of time. These include food, housing, transportation, clothing, furniture and recreation. Statistics Canada measures the CPI monthly, and compares this figure to a base year. Right now the base year is 1992, and the basket is given a value of 100 for that year. In 2000, the CPI reached 113.5, which means that what you could buy in 1992 for $100 cost $113.50 in the year 2000.

As a consumer and as an investor, the CPI is significant to you in a number of ways. In a broad sense, the CPI can tell you about inflation and its effect on your after-tax dollars. Statistics Canada also releases these results to the Bank of Canada, and the federal government. This data is used, along with other measures and information, as a guide in the formulation of monetary policy. For more information on the CPI and other measures, visit the Bank of Canada web site at www.bankofcanada.ca, and the Statistics Canada web site at www.statscan.ca.